OECD

The Organisation for Economic Co-operation and Development (OECD; French: Organisation de Coopération et de Développement Économiques, OCDE) is an intergovernmental economic organisation with 38 member countries,[1] founded in 1961 to stimulate economic progress and world trade. It is a forum of countries describing themselves as committed to democracy and the market economy, providing a platform to compare policy experiences, seek answers to common problems, identify good practices and coordinate domestic and international policies of its members. Generally, OECD members are high-income economies with a very high Human Development Index (HDI) and are regarded as developed countries. As of 2017, the OECD member countries collectively comprised 62.2 % of global nominal GDP (US$49.6 trillion)[4] and 42.8 % of global GDP (Int$54.2 trillion) at purchasing power parity.[5] The OECD is an official United Nations observer.[6]

In 1948 the Organisation for European Economic Co-operation (OEEC),[7] led by Robert Marjolin of France, was established to help administer the Marshall Plan (which was rejected by the Soviet Union and its satellite states).[8] This would be achieved by allocating United States financial aid and implementing economic programs for the reconstruction of Europe after World War II.[9] In 1961, the OEEC was reformed into the Organisation for Economic Co-operation and Development and membership was extended to non-European states.[10][11]

The OECD's headquarters are at the Château de la Muette in Paris, France.[12] The OECD is funded by contributions from member countries at varying rates and had a total budget of €386 million in 2019.[3]

The OECD is recognised as a highly influential publisher of mostly economic data through publications as well as annual evaluations and rankings of member countries.[13]

The Organisation for European Economic Co-operation (OEEC) was formed in 1948 to administer American and Canadian aid in the framework of the Marshall Plan for the reconstruction of Europe after World War II.[14] Similar reconstruction aid was sent to the war-torn Republic of China and post-war Korea, but not under the name "Marshall Plan". The organisation started its operations on 16 April 1948, and originated from the work done by the Committee of European Economic Co-operation in 1947 in preparation for the Marshall Plan. Since 1949, it has been headquartered in the Château de la Muette in Paris, France. After the Marshall Plan ended, the OEEC focused on economic issues.[7]

In the 1950s, the OEEC provided the framework for negotiations aimed at determining conditions for setting up a European Free Trade Area, to bring the European Economic Community of the six and the other OEEC members together on a multilateral basis. In 1958, a European Nuclear Energy Agency was set up under the OEEC

By the end of the 1950s, with the job of rebuilding Europe effectively done, some leading countries felt that the OEEC had outlived its purpose, but could be adapted to fulfill a more global mission. It would be a hard-fought task, and after several sometimes fractious meetings at the Hotel Majestic in Paris starting in January 1960, a resolution was reached to create a body that would deal not only with European and Atlantic economic issues, but devise policies to assist less developed countries. This reconstituted organisation would bring the US and Canada, who were already OEEC observers, on board as full members. It would also set to work straight away on bringing in Japan.[15]

Following the 1957 Rome Treaties to launch the European Economic Community, the was drawn up to reform the OEEC. The Convention was signed in December 1960 and the OECD officially superseded the OEEC in September 1961. It consisted of the European founder countries of the OEEC plus the United States and Canada (three countries, Netherlands, Luxembourg and Italy, all OEEC members, ratified the OECD Convention after September 1961 but are nevertheless considered founding members). The official founding members are:

During the next 12 years Japan, Finland, Australia, and New Zealand also joined the organisation. Yugoslavia had observer status in the organisation starting with the establishment of the OECD until its dissolution as a country.[16]

The OECD created agencies such as the OECD Development Centre (1961), International Energy Agency (IEA, 1974), and Financial Action Task Force on Money Laundering.

Unlike the organisations of the United Nations system, OECD uses the spelling "organisation" with an "s" in its name rather than "organization" (see -ise/-ize).

In 1989, after the Revolutions of 1989, the OECD started to assist countries in Central Europe (especially the Visegrád Group) to prepare market economy reforms. In 1990, the Centre for Co-operation with European Economies in Transition (now succeeded by the Centre for Cooperation with Non-Members) was established, and in 1991, the Programme "Partners in Transition" was launched for the benefit of Czechoslovakia, Hungary, and Poland.[16][17] This programme also included a membership option for these countries.[17] As a result of this, Poland,[18] Hungary, the Czech Republic, and Slovakia, as well as Mexico and South Korea[19] became members of the OECD between 1994 and 2000.

In the 1990s, a number of European countries, now members of the European Union, expressed their willingness to join the organisation. In 1995, Cyprus applied for membership, but, according to the Cypriot government, it was vetoed by Turkey.[20] In 1996, Estonia, Latvia, and Lithuania signed a Joint Declaration expressing willingness to become members of the OECD.[21] Slovenia also applied for membership that same year.[22] In 2005, Malta applied to join the organisation.[23] The EU is lobbying for the admission of all EU member states.[24] Romania reaffirmed in 2012 its intention to become a member of the organisation through the letter addressed by the Romanian Prime Minister Victor Ponta to then-OECD-Secretary-General José Ángel Gurría.[25] In September 2012, the government of Bulgaria confirmed it will apply for membership before the OECD Secretariat.[26]

The OECD established a working group headed by ambassador Seiichiro Noboru to work out a plan for the enlargement with non-members. The working group defined four criteria that must be fulfilled: "like-mindedness", "significant player", "mutual benefit" and "global considerations". The working group's recommendations were presented at the OECD Ministerial Council Meeting on 13 May 2004.[16] On 16 May 2007, the OECD Ministerial Council decided to open accession discussions with Chile, Estonia, Israel, Russia and Slovenia and to strengthen co-operation with Brazil, China, India, Indonesia and South Africa through a process of enhanced engagement.[27] Chile, Slovenia, Israel and Estonia all became members in 2010.[28] In March 2014, the OECD halted membership talks with Russia in response to its role in the 2014 Annexation of Crimea.[29][30]

In 2013, the OECD decided to open membership talks with Colombia and Latvia. In 2015, it opened talks with Costa Rica and Lithuania.[31] Latvia became a member on 1 July 2016 and Lithuania on 5 July 2018.[32][33] Colombia signed the accession agreement on 30 May 2018 and became a member on 28 April 2020.[34] On 15 May 2020, the OECD decided to extend a formal invitation for Costa Rica to join the OECD,[35] and joined as a member on 25 May 2021.[2]

Other countries that have expressed interest in OECD membership are Argentina, Peru,[36] Malaysia,[37] Brazil,[38] and Croatia.[39]

The OECD publishes and updates a model tax convention that serves as a template for allocating taxation rights between countries. This model is accompanied by a set of commentaries that reflect OECD-level interpretation of the content of the model convention provisions. In general, this model allocates the primary right to tax to the country from which capital investment originates (i.e., the home, or resident country) rather than the country in which the investment is made (the host, or source country). As a result, it is most effective as between two countries with reciprocal investment flows (such as among the OECD member countries), but can be unbalanced when one of the signatory countries is economically weaker than the other (such as between OECD and non-OECD pairings). Additionally, the OECD has published and updated the Transfer Pricing Guidelines since 1995. The Transfer Pricing Guidelines serve as a template for profit allocation of inter-company transactions to countries. The latest version, of July 2017, incorporates the approved Actions developed under the Base Erosion and Profit Shifting (BEPS) project initiated by the G20.

Finance officials from 130 countries agreed on July 1, 2021 to plans for a new international taxation policy. All the major economies agreed to pass national laws that would require corporations to pay at least 15% income tax in the countries they operate. This new policy would end the practice of locating world headquarters in small countries with very low taxation rates. Governments hope to recoup some of the lost revenue, estimated at $100 billion to $240 billion each year. The new system was promoted by the Biden Administration in the United States and the OECD. Secretary-General Mathias Cormann of the OECD said, "This historic package will ensure that large multinational companies pay their fair share of tax everywhere."[40]

The OECD Guidelines for Multinational Enterprises are a set of legally non-binding guidelines attached as an annex to the OECD Declaration on International Investment and Multinational Enterprises. They are recommendations providing principles and standards for responsible business conduct for multinational corporations operating in or from countries adhering to the Declaration.

The OECD's work on bid rigging includes the publication of guidelines for fighting this practice in the context of public procurement.[41] In a Policy Brief issued in October 2008, OECD noted that "programmes to systematically educate procurement officials exist in only a few OECD countries".[42] "Guidelines for Fighting Bid Rigging in Public Procurement" were published in 2009,[41] and incorporated into a "Recommendation on Fighting Bid Rigging in Public Procurement" which was adopted on 17 July 2012, calling on member governments "to assess their public procurement laws and practices at all levels of government in order to promote more effective procurement and reduce the risk of bid rigging in public tenders".[43]

The OECD publishes books, reports, statistics, working papers, and reference materials. All titles and databases published since 1998 can be accessed via OECD iLibrary. The OECD Library & Archives collection dates from 1947, including records from the Committee for European Economic Co-operation (CEEC) and the Organisation for European Economic Co-operation (OEEC), predecessors of today's OECD. External researchers can consult OECD publications and archival material on the OECD premises by appointment.

Reports on a wide range of topics for sale at the OECD's Conference Centre Bookshop

The OECD releases between 300 and 500 books each year. The publications are updated to the OECD iLibrary. Most books are published in English and French. The OECD flagship[vague] titles include:

All OECD books are available on the OECD iLibrary, the online bookshop or OECD Library & Archives.[n 1]

OECD Observer, an award-winning magazine[n 2] was launched in 1962.[45] The magazine appeared six times a year until 2010, and became quarterly in 2011 with the introduction of the OECD Yearbook, launched for the 50th anniversary of the organisation.[46] The online and mobile[47] editions are updated regularly. News, analysis, reviews, commentaries and data on global economic, social and environmental challenges. Contains listing of the latest OECD books, plus ordering information.[48] An OECD Observer Crossword was introduced in Q2 2013.[49]

The OECD is known as a statistical agency, as it publishes comparable statistics on numerous subjects. In July 2014, the OECD publicly released its main statistical databases through the OECD Data Portal, an online platform that allows visitors to create custom charts based on official OECD indicators.[50][51]

There are 15 working papers series published by the various directorates of the OECD Secretariat. They are available on iLibrary, as well as on many specialised portals.

The OECD is responsible for the OECD Guidelines for the Testing of Chemicals, a continuously updated document that is a de facto standard (i.e., soft law).

It has published the OECD Environmental Outlook to 2030, which shows that tackling the key environmental problems we face today—including climate change, biodiversity loss, water scarcity, and the health impacts of pollution—is both achievable and affordable.

Delegates from the member countries attend committee and other meetings. Former Deputy Secretary-General Pierre Vinde [sv] estimated in 1997 that the cost borne by the member countries, such as sending their officials to OECD meetings and maintaining permanent delegations, is equivalent to the cost of running the secretariat.[52] This ratio is unique among inter-governmental organisations.[citation needed] In other words, the OECD is more a persistent forum or network of officials and experts than an administration.

The OECD regularly holds minister-level meetings and forums as platforms for a discussion on a broad spectrum of thematic issues relevant to the OECD charter, member countries, and non-member countries.[53]

The exterior of the Château de la Muette and the grounds of the OECD Conference Centre

Exchanges between OECD governments benefit from the information, analysis, and preparation of the OECD Secretariat. The secretariat collects data, monitors trends, and analyses and forecasts economic developments. Under the direction and guidance of member governments, it also researches social changes or evolving patterns in trade, environment, education, agriculture, technology, taxation, and other areas.

The head of the OECD Secretariat and chair of the OECD Council is the Secretary-General. Secretary-General selections are made by consensus, meaning all member states must agree on a candidate.[55]

Representatives of member and observer countries meet in specialised committees on specific policy areas, such as economics, trade, science, employment, education or financial markets. There are about 200 committees, working groups and expert groups. Committees discuss policies and review progress in the given policy area.[62]

OECD decisions are made through voting, which requires unanimity among all of those voting. However, dissenting members which do not wish to block a decision but merely to signal their disapproval can abstain from voting.[64]

The European Commission participates in the work of the OECD alongside the EU member states.[90] Dependent territories of member states are not members in their own right, but may have membership as part of their controlling state.[91] As of January 2021, the Dutch territory of the Caribbean Netherlands and the British territories of Guernsey, Jersey, the Isle of Man, Gibraltar, and Bermuda are members of the OECD.[92][93] Territories of other OECD member states are not members of the OECD.

Free Territory of Trieste (Zone A) was member of the OEEC until 1954, when it ceased to exist as an independent territorial entity.[7]

In May 2007, the OECD decided to open accession negotiations with Russia.[27] In March 2014, the OECD halted membership talks in response to Russia's role in that year's Crimean Annexation and continuous human and civil rights abuses.[29][30]

Countries whose membership request is under consideration by the OECD Council

The following table shows various data for OECD member countries, including area, population, economic output, and income inequality, as well as various composite indices, including human development, viability of the state, rule of law, perception of corruption, economic freedom, state of peace, freedom of the press, and democratic level.